Strategic choices at entry and relative survival advantage of cooperatives versus corporations in the US bio-ethanol industry, 1978-2015Strategic choices at entry and relative survival advantage of cooperatives versus corporations in the US bio-ethanol industry, 1978-2015

Author

Boone, Christophe

Özcan, Serden

Faculty/Department

Faculty of Applied Economics

Publication type

article

Publication

2016Oxford
, 2016

Subject

Economics

Source (journal)

The journal of management studies / University of Lancaster. School of Mangement. - Oxford

The sustainability of cooperatives versus corporations is hotly contested. We propose that strategic choices at entry can help to explain the endurance of these two governance modes. We hypothesize that cooperatives have a survival advantage if their major drawback high coordination costs is curbed by high levels of member engagement at founding. Our analysis of survival rates in the US bio-ethanol industry shows that cooperatives outlive corporations (1) if investment size at founding is large (strong financial engagement), (2) if they enter de novo instead of de alio (strong product-market engagement) and (3) if the cooperative venture has been carefully planned from the start (greenfield entry) instead of built upon the acquisition of an existing plant (strong venture-building engagement). These findings caution against the view that a particular mode of governance is superior or inferior to another in all circumstances.